Service tax on separately billed spares and target incentives was set aside under the Tribunal's earlier ruling.

Service tax could not be sustained on the separately billed value of spare parts used during repairs, because that value was not to be added to the service value. Target-based incentives were also held not liable to service tax under the business auxiliary service category. As the dispute was covered by the Tribunal's earlier decision in the assessee's own case, the impugned order was not sustainable and the demand, interest and penalties were set aside.

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Issues: Whether the demand of service tax, interest and penalties on sale of spares, accessories, oils, labour income and target incentive was sustainable.

Analysis: The dispute was held to be covered by the Tribunal's earlier decision in the assessee's own case. The value of spare parts used during repair and billed separately was not to be added to the value of services, and incentives received for achieving target sales were not liable to service tax under the business auxiliary service category. In view of the earlier binding decision, the impugned order could not be sustained.

Conclusion: The demand, interest and penalties were set aside and the appeal was allowed.

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